Carter’s Faces Financial Challenges Amid Dividend Cut and Declining Retail Performance

Christopher Nardone, an analyst from Bank of America Securities, maintained the Sell rating on Carter’s (CRI – Research Report). The associated price target remains the same with $30.00.

Christopher Nardone has given his Sell rating due to a combination of factors impacting Carter’s financial outlook. One major concern is the recent decision by Carter’s to cut its quarterly dividend from $0.80 to $0.25 per share, which reflects a significant reduction in shareholder returns. This decision was made to align the dividend with the company’s current profitability levels, which have been pressured by the challenging tariff environment. The company faces a potential margin impact of 470 basis points due to tariffs, and raising prices may not be a viable option as Carter’s has previously reduced prices to attract store traffic.
Additionally, the performance of Carter’s US Retail segment has been underwhelming, with a 25% decline in sales and a 1,000 basis point drop in EBIT margins over the past three years. The new CEO is expected to present a plan to address these issues, which may include store closures, a shift in product focus, and reevaluation of pricing and wholesale strategies. However, given the current market conditions and the need for strategic adjustments, Nardone maintains a cautious outlook on the stock, reflected in the Sell rating.

In another report released on May 14, Wells Fargo also maintained a Sell rating on the stock with a $28.00 price target.

CRI’s price has also changed moderately for the past six months – from $50.970 to $36.770, which is a -27.86% drop .